WHAT IS PONZI SCHEME?

A ponzi scheme is a sketchy and unsustainable business model, where a few top-level members recruit newer members, who pay upfront costs up the chain, to those who enrolled them. In a typical ponzi scheme, you pay to join. The scheme relies on you convincing other people to join up and to part with their money as well. The money received from the new recruits is used to pay off the earliest investors. The new members are then promised earnings if they are able to recruit more people into the scheme.

In reality, the number of people willing to join the scheme, and therefore the amount of money coming into the scheme, will dry up very quickly.

Some ponzi scheme promoters disguise their true purpose by introducing products that are overpriced, of poor quality, difficult to sell or of little value. Making money out of recruitment is still their main aim.

Often ponzi scams are illegal in some countries.

IS PONZI SCHEME A SCAM?

A ponzi scheme is a scam that is founded on an unsustainable business model. The thing is that you are investing in a certain amount of money. Then you are selling the scheme to someone else. This means that you are going to get a profit in your pocket. And, if the persons that you have sold the scheme to, is selling to someone else, you are going to get double the profit.

The recruitment process continues until the cycle is unable to sustain itself. By the time the scheme falls apart, the earliest investors (those at the top of the ponzi) will have earned significant profits, while the most recent members will have lost on their investments.

The problem is that you won’t see the profit. You will only pay your money to someone at the top of the scheme. He is basically getting all the money. You and the persons you have sold the scheme to, won’t see a cent profit. It is just another scam that people are doing to steal money from innocent people.